May 5: The lockdowns imposed by the governments across the globe is expected to adversely affect the interest which Nepal Nepal Rastra Bank (NRB) receives from the international market. Many countries have reduced their interest rate to save their economy. So, NRB will lose billions of rupees which it earns through interest coming from the deposits it makes in international banks. In the current fiscal year, it is estimated that NRB will have profit of only Rs 28 billion.

In the fiscal year 2018/2019, NRB had made a profit of Rs 35.77 billion from international currency and investment in securities. Similarly, in the fiscal year 2017/2018, the profit was Rs 32.34 billion. However, in the current fiscal year, NRB predicted that it will lose Rs 7 billion.

Almost all foreign exchange reserves of Nepal is in dollar. Nepal has deposited in USA, Singapore and India. As the interest rate has decreased in those countries, Nepal is poised to lose profit obtained from the interest. Currently, USA has reduced the interest rate in deposit to 0.25 percent. Similarly, Reserve Bank of India (RBI) has also decreased the interest rate.

According to NRB spokesperson Gunakar Bhatta, Nepal had invested its foreign exchange reserve in the Central Bank of USA at an interest rate of 2.25 percent per annum.

Chnitamani Siwakoti, deputy governor of NRB, says that the profit from the interest will decrease till the end of this FY. “We get the maximum revenue from foreign exchange reserves. The revenue from foreign exchange reserve is much higher than the revenue from treasury bills, bonds and security investments,” added Shivakoti.

 “Every year, NRB invests its profit in various funds and provides the remaining amount to the government,” said Shivakoti. In the last FY, NRB provided Rs 12 billion to the government.

According to Bhatta, many countries have decreased the interest rate as they are investing the amount in relief packages. In Nepal too, the interest rate in deposit has been decreased to 6.5 percent. The interest rate in deposit has reduced worldwide, and the effects will be felt for a very long time.